B.S.C. Holding and Lyons Salt Company (collectively BSC) appeal the district court's dismissal of their claims against Lexington Insurance, the insurer of the Lyons Salt Mine. The Lyons Salt Mine is a Kansas facility that experienced a large inflow of water beginning in 2008, which was eventually attributed to an abandoned surface gas well.

BSC argues that the district court erred in dismissing its case based on an insurance policy provision requiring all suits be commenced within twelve months of the discovery of the underlying loss or series of losses. It argues that the district court made two errors in reaching its conclusion. First, BSC contends that Kansas law prohibits the enforcement of suit-limitation provisions unless the insurer can show it was prejudiced by the plaintiff's failure to file a timely suit. Although Kansas applies a prejudice requirement when plaintiffs fail to comply with notice-of-loss provisions, we decline to extend the prejudice requirement to cases involving suit-limitation provisions.

Second, BSC argues the district court erred in finding the limitation period expired before it brought its suit. BSC contends that the limitation period should not have begun until it understood the causes that led to the flooding of the mine. Under the provisions of the insurance policy, BSC had an obligation to bring suit within twelve months of any event leading to direct physical loss. Although there may be cases where a plaintiff needs to know the cause of seemingly uncovered damage in order to discover that he may be dealing with a covered loss, this is not such a case.

Exercising jurisdiction under 28 U.S.C. 1291, we AFFIRM.

I. Background

BSC Holding is the sole shareholder of Lyons Salt Company, the operator of the Lyons Salt Mine. Beginning in 2002, BSC purchased from Lexington Insurance a series of annual all-risk insurance policies covering the property.

In late 2004, BSC first learned of problems with the mine. At that time, it discovered the space between the floor and ceiling in a section of the mine was contracting at an abnormally high rate. The problem reoccurred again in April of 2005 and again a few months after that. In September 2005, a consultant informed BSC that water may enter the mine due to the abnormal closure rates and that this could be a "huge problem." App., Vol. 6 at 1489. By December 2006, one portion of the mine had closed from an original height of 16.5 feet to 4.5 feet. At this point BSC began considering a number of remedies, including construction of an underground bulkhead to seal off the area. They also began performing backfilling in the area.

In January 2008, BSC discovered a water leak of twenty-two gallons per minute in the section of the mine where closure had occurred. Unsure as to the cause, BSC retained outside mining experts to investigate the situation. Although the experts initially believed the problem to be naturally occurring, they ultimately concluded in April 2010 that an improperly sealed well had caused a deformation in the rock above the mine, which in turn created a path between the mine and an aquifer. Because of the nature of the problem, the panel further concluded the flooding could not be stopped and that, eventually, the roof of the mine would collapse, flooding the entire mine and destroying structures on the surface above.

BSC finally informed Lexington of the leak in May 2010 and made a claim against its policy, requesting compensation for the expenses it had incurred in attempting to diagnose and remedy the situation. In October 2010, Lexington sent a response letter. In the letter, Lexington acknowledged the claim and reminded BSC that it was "required to take steps to minimize the exposure and risk associated with this loss." App., Vol. 7 at 1940.

Lexington made no further response to BSC's request for reimbursement, and BSC filed suit in May 2011. In 2013, the district court granted summary judgment to Lexington on the grounds that BSC had not complied with a policy provision requiring it to provide Lexington with notice of its loss "as soon as practicable." B.S.C. Holding, Inc. v. Lexington Ins. Co. (B.S.C. I), 559 F.App'x 663, 665 (10th Cir. 2014). We reversed, holding that an insured's failure to comply with such notice-of-loss provisions does not bar suit unless the insurer demonstrates it was prejudiced by the delay.

On remand, the district court again granted Lexington summary judgment and dismissed all of BSC's claims. Specifically, the court found that the case was time-barred by the suit-limitation provision in the insurance policy. The district court found that BSC discovered the occurrence-or loss-giving rise to the claim no later than January 18, 2008, the day water first entered the mine in large quantities. Because BSC did not file its suit until forty-one months later, the court found the suit barred by the limitation provision. In the alternative, the court found the mine ...

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